Problem 08.032-Choose from one of four machines based on ROR analysis Old Southw

Question

Problem 08.032-Choose from one of four machines based on ROR analysis Old Southwest Carining Co. has determined that any one of four machines can be used in its c machines are estimated below and all machines have a 5-year life. I the minimum attractive rate o return is 25% per year, determine hil canning operation. The cost of the which machine should be selected on the basis of a rate of return analysis First Cost, S -28,000 51,000 Machine -20,000 -12,000 9.000 18,000 33.000 Machine [Click to select) should be selected

Explanation / Answer

machine 2 should be selected

First cost =51000

Minmum rate of return is 25%

therefore =51000*0.25= 12750

AOC is 12000.

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